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The Future of Sugar in South Africa

Overview

In South Africa, a new tax on sugar-sweetened beverages goes live in April 2017. This is a strong reaction by the government to the negative impacts of excessive consumption of refined sugars on consumer health—i.e., its contribution to chronic health issues such as obesity, diabetes and cardio vascular disease.

While public health lobbyists commend government for its bold move, beverage producers are understandably concerned about the potential financial and reputational impacts to their businesses.

They will need to restrategise to retain customers’ trust and be competitive.

The impact of a sugar tax on local and multinational beverage producers.

The opportunities the shift in the global sugared-beverage landscape offers beverage producers to innovate, disrupt and redefine the industry.

Background

Globally, the health impact of excessive consumption of refined sugars is being keenly felt. It has prompted developed and emerging nations globally to introduce or consider introducing sugar and fat taxes. Beverage producers are among those most severely impacted for a very clear reason:

The sugar contained in an average 330ml can of soda is 10 grams higher than the daily amount of sugar recommended by the World Health Organization for an adult male.

In South Africa, the consumption of ‘hidden’ sugars at 30 to 54 grams is considerably higher than that of emerging market contemporaries such as India and China. This has prompted the government to take a firm stance.

For beverage producers, it will be important to gain a clear understanding of how the market will be impacted in order to re-position themselves for success.

The Future of Sugar in South Africa identifies key areas of opportunity.

World Health Organization says 25g of sugar a day is enough. A can of soda contains 35g.

Recommendations

For South African sugar-sweetened beverage producers, responding effectively will require a value chain strategy that builds trust and drives competitiveness—for the company, its partners and suppliers, and the economy.

How can beverage producers restrategise to build trust and maintain competitiveness?

Product reformulation, clear labelling, responsible advertising, new pricing strategies ... The Future of Sugar in South Africa identifies clear opportunities for beverage producers to innovate, disrupt and redefine the industry.

Accenture believes the winning approach will be: “Value for all or no value at all.”

Finding a sustainable solution will require cooperation and collaboration across the value chain by regulators, suppliers, producers, customers and consumers. Understanding changing market variables—from the impacts of new regulation to growing consumer awareness and demands—is a first step.

Dr. Roze Phillips is a managing director within Accenture Consulting for Sub-Saharan Africa. She has spent over 15 years consulting in consumer-related industries, focusing on helping businesses drive better strategic outcomes, with a particular emphasis on transforming business in Africa. She holds Bachelor of Medicine and Master’s of Business Administration degrees from the University of Cape Town and is a student of Future Studies. She is based in Johannesburg and can be reached via email.

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